These are just my opinions. I cannot promise that I will be perfect, but I can promise that I will seek to understand and illuminate whatever moves that the Giants make (my obsession and compulsion). I will share my love of baseball and my passion for the Giants. And I will try to teach, best that I can. Often, I tackle the prevailing mood among Giants fans and see if that is a correct stance, good or bad.

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Friday, September 16, 2011

Your 2011 Giants: Neukomium Blast Aftermath

Wanted to follow up with something after the hastily arranged press conference the Giants threw yesterday. Here is a link to the transcript, courtesy of Tim Kawakami (with assistance from Janie McCauley, Chris Haft, Jorge Ortiz, John Shea and Adam Berry). I will go over the interview later in this post. Kawakami also had a post-press conference exclusive interview with Larry Baer here for the Merc. He did a great job with both.

Lastly, wanted to point out two great articles on the debacle. First, there is Monte Poole's great article on the move, "Just the Latest Rift". Took me FOREVER, to find the article online, no link to it showed up for any of the Mercury articles on the firing of Bill Neukom. The other was Gwen Knapp's "Neukom's ouster a misplay by Giants' ownership", and both make it plain that it was a firing, not a voluntary retirement.

Click on Title for full post

Giants Thoughts

And that is what this is, clearly now, Bill Neukom was fired. Following is the transcript of the whole Q&A with the press with my commentary, go to here for the Giants official press release, plus the opening official Giants remarks first.

THE OPENING REMARKS

-NEUKOM: As the team announced last evening, it’s my intention to retire as the managing general partner of the Giants, effective the end of this calendar year, Dec. 31.

The good news is that I’ll be succeeded by no one other than Larry Baer, who’s been the cornerstone of this franchise for 20 years or so. I will continue to serve the Giants in the capacity of chairman emeritus for 2012 and perhaps beyond. We’ll try for a year.

My responsibilities as emeritus include being available for advice to senior management on a whole range of strategic subjects and to continue to be part of the Giants delegation to major league baseball and to be active on the diversity and international committees of major league baseball.

And to find ways to be useful, to be a listening post and an advocate for the Giants.

It’s been a remarkable journey… (EDIT)

When I agreed to put aside some other responsibilities to have time to devote as the CEO of the Giants, I realized pretty early on that there were a number of objectives that were critical to the Giants.

And those strategic objectives we have largely achieved over the last three and a half or four years, and it’s not my credit, it’s the credit of the people we just met with upstairs, who as a group have made all of this work.

We were coming off four losing seasons; we wanted to play winning baseball and get the Giants back to being competitive and to build on that and to get them back to being contending.

So they were the kind of team that the Giants ought to be, where the fans and the community and the players and the coaches and everybody could expect, that year in and year out, we’d be in the hunt, we’d have a chance to get into the postseason.

So winning baseball was at the top of the list. Getting back to winning baseball. Being a winning organization.

We also wanted to increase our attendance and our revenues from all sources. And we’re at a point now where we have a very powerful momentum in that direction, as you know.

We wanted to increase the value of the enterprise—that’s the job of the CEO, put more value in the enterprise for the investors. And we have accomplished that. We wanted to find a way to find more professional management systems into the front office, so could be more efficient and more productive. And thanks to the great group of people in the front office, we have accomplished that.

We wanted to integrate baseball in with the rest of the enterprise. We needed to learn more about baseball so we could be more useful and supportive and get them the resources they need to win games between the lines.

And at the same time we have benefited enormously from Brian, Dick and Bobby and other people who brought their intelligence into our management of the front office.

So it’s been a very synergistic integration of baseball with the rest of the enterprise. And that is not common in major league baseball or indeed in professional sports.

And of course most of all we wanted to win it all, and we managed to achieve that last year, thanks to the work of the baseball people with the support of the front office.

As Bud Selig reminded me in a recent conversation, there’s a time to come into an organization; there’s a time to leave an organization.

And having accomplished as much as this group has around those objectives, this is plainly a good time for me to leave the organization as the chief executive officer. I will continue to serve as chairman emeritus for the next year at least.

(EDIT)

In short, this franchise is stronger than it has ever been, in terms of the prospects for contending baseball and in terms of a really productive, efficient meritocracy of colleagues and workers in the front office.

So it’s a little like the mountaineers, they talk about coming to a campsite and leaving it better than you’ve found it.

If you compare to where we were in 2007 and ‘8 and where we are today, 2011, this group of colleagues, of Larry’s and mine, have pushed us forward, we are on a positive trajectory and there’s every reason to believe that we’ll continue to accelerate up that positive trajectory.

As much as I have a passion for baseball, I have a passion for the law… (EDIT)

We have managed I think over the last four years to re-energize our fan base. You’ve seen the numbers. As we’ve said to ourselves at management committee meetings monthly, if we’re playing good baseball, a lot of other good things happen. If we’re not playing good baseball, it’s hard to get other things done.

(EDIT)

ogc: I wish so much wasn't edited out, I love reading everything said. That said, this is pretty standard CEO leaving speech, "Thing were bad here, I, with the great work of everyone, helped to make it better, here are the things I made better, but now I'm leaving to do other things important to me. Thanks. Kumbayah!"

-BAER: I think it’s pretty obvious that this organization and our fans will forever be indebted to Bill for his service. We have one of these (points to ring). And this organization that’s been around 130 years, it’s the first time in 56 years we have a World Series championship. And it was under Bill’s leadership and under his watch that was achieved.

(EDIT)

It’s an honor to follow in Bill’s footsteps and also Peter’s footsteps, two great leaders who have devoted themselves with great passion to the Giants.

(EDIT)

Can’t emphasize enough how important Brian’s work has been to this organization in the past years. The work of Bruce Bochy as our field manager, who obviously can’t be here, I think would be here if the team was here. The work of all the folks that work for Brian and Bruce, the coaching staff and of course some of Brian’s people… (EDIT)

Going forward, I’m sure there’ll be questions about this, but this is business as usual. To put it simply, this is not a turn-around in stretch of the imagination.

As Bill said, this franchise really is stronger than ever. The perspective of winning is always foremost, tantamount, always will be. We’ve had continuity around that concept for 20 years that this group has owned the team, first year being 1993.

We’re extremely well-positioned for the future and I look forward to the honor and the privilege of taking the reins to make sure that we continue to do what we’ve been doing in the past years and do it as passionately and with as much heart as Bill and Peter before him have exhibited.

ogc: Again with the edits... Sigh... Another typical "I'm taking over" corp-speak when things are fine and yet the boss is leaving: "Honor to follow my esteemed predecessor, nothing has changed, all the great people are still here, doing what we've been doing." Or, in other words and between the lines, this thing is bigger than he is, we'll be fine without him, wink wink, nudge nudge.

Press Q&A

-Q: Larry, will there be a managing general partner or will you act as that?

-BAER: I”ll be reporting to a board, just as Bill did — a board of the Giants ownership group.

ogc: Looks like they got rid of that job title, but as I noted before, I thought Larry was being groomed to take over at some point anyway, and he'll never own enough to be managing general partner, so it makes sense that this particular title goes away with his ascension.

-Q: So there will be no managing general partner?

-BAER: There will be a board. Everybody has a boss. I’ll be reporting to a board of owners.

ogc: Baer emphasizing what his position is, and since it is basically like Neukom's, reading between the lines, it means that there is no longer a managing general partner, just CEO Baer.

-Q: Bill, after the year as emeritus, are you going to remove yourself from the investor group minus the 10 original shares?

-NEUKOM: I wish I still had that stock certificate. (laughter)

I have been an investor since ’94. I was just a year late to get in with the organizing group. There’s a time to come in and a time to go out. There’s a time to invest and a time to divest, so I will be divesting.

I will be a season ticket holder, and I will be a fan in every sense, and I will continue to be accessible if there’s anybody on Larry’s team that has questions where I can be useful. I intend to try to be useful.

It’s a little bit of a General MacArthur move. I’ll be pretty active here next year as emeritus, as well as the time at Stanford Law School.

[EDIT]

Once I’ve divested, frankly it creates an opportunity for me to do some things in terms of investing in other entities.

ogc: I thought of this immediately once I heard he was divesting: he was pushed out. Kawakami also saw that in his article. It makes a lot of sense, if you are pushed out, the implication is that you didn't do your job in some way. But in the corporate world, that is usually sloughed over with corp-speak and niceties, which covers up the true situation. But they can't force him to keep his shares, so this was his silent but clear "F-U" finger to the owners, to make it clear to the outside that he was pushed out.

I mean, come on. He's talked about his connection with the Giants since he was a child. He bought in early and added on shares over the years as other divested and he added on. (I tried to verify my memory but after 3 tries at skimming "A Band of MiSFits" I could not find the part on Neukom). He got up to, I'm guessing, 10% ownership and when Magowan was pushed out, he stepped up and bought another 5% more (from memory). Now that he's retiring from a job well done, per his description, he's going to SELL all his shares?

That is a F-U to the rest of the ownership group, "you don't like having to pay into the Giants so you want to build up a huge rainy day fund? Well, how do you like paying for all of my shares (cough...dimwits)?"

How cool is that, the owners hate putting more money into the Giants, so they force out Neukom since he spent the money instead of funding more rainy days (and after account for costs of producing the t-shirts and storefront costs, I estimated actual money in the pocket at around $0.5-1.0M per month, so really, only about $6-10M total that they are complaining about not going into the rainy day fund), so he divests ALL his shares, which will force them to put in even MORE money into the Giants.

And it is a lot more, according to Forbes, the Giants were valued at $563M after 2010 (probably more now with all the T-shirt revenues of $1.5-2.0M per month, which I referenced above), and 15% of that is $84.5M, way more money that they would have to had to pay into the club than Neukom could have ever spent without reporting it to the owners. I'm laughing as I'm typing this. This is such a perfect stick-it-to-them move.

-Q: Bill, were you forced out?

-NEUKOM: I don’t think that’s the right characterization at all. As you might imagine, some time after I came back to earth — I’m still not back to earth after last year–I asked myself, ‘Is there a succession plan? How much longer can you, should you, do you want to do this job?’

In the course of thinking about that and talking with folks about it, including the other investors, I think the conclusion was that this was the right time to turn the reins over to Larry.

At a time when the franchise has never been stronger, never better able to meet its founding principle, which is to be a winner on and off the field.

I think it’s just an evolutionary process. I didn’t have any fixed term in mind when I pushed other things aside and agreed to step in, and it seemed to me as though it’s come pretty much full cycle. I had accomplished what I set out to accomplish when I was asked to step in.

ogc: According to questioning below, there was no one event, yet according to this answer, coming down was the event, seemingly. Neukom fell on the grenade and gave a very gracious denial, as a good corporate soldier.

But if this is as simple as he makes it, how does he DIVEST ALL HIS SHARES as part of the move? Is he retiring as a Giants fan too? No, he claims that he will hold onto his season tickets. If he truly was just moving aside, as such a long-term fan, don't you think he would hold onto his shares? After all, he has around $500M in other assets, he don't need the $85-100M he will get for his shares (according to one version I read, the divestment don't happen until after next season; most probably, the ownership couldn't pony up the full amount in a few months, so he's giving them to the end of next year, and the value of the team should jump up for next year giving the increase in revenues).

No, he's clearly being fired, and to protest this move, he's divesting all his shares, which puts ownership in a bad spot. But it's only fair, they put him in a bad spot.

According to one rumor I've seen, it was Harmon and Sue Burn's daughters backing this move, and if so, apparently they did not share their parent's admiration for what Neukom brought to the job. Too bad, I think he did a great job and he put his money where his mouth is, and I had hopes that he would do that in the future. I don't have great faith that the remaining owners will do that, and that is what is necessary to 1) keep our young players with us to their early 30's; and 2) get the free agents necessary to win with that youth.

-Q: Bill, can you explain why there were accountability/communication issues with the committee and why the committee has shown the door to two CEOs in three years?

-NEUKOM: I don’t think that’s a fair characterization of what’s transpired. There are a group of nine of us who are the major investors, and within that group of nine there are five of us who are the largest investors.

As is the case in any partnership or any family business, if you will, there are differences in opinions and there are deliberations and discussions that go on about a whole range of issues.

The fact is that from the first meeting I attended as a limited partner in 1994 through the meetings I attended as a general partner, initially with Harmon Burns and Peter and then with Sue and Peter beginning in 2003 when I was asked to become general partner, to the meetings I organized and presided over as the managing general partner beginning in fall 2008.

Each one of those meetings, and all of the discussions between the meetings, was about how do we make the Giants successful.

How do we put a winning team on the field, a contending team on the field year in and year out? How can we do business in the best practical way, in the most honorable business-like way possible so as to get the most done with our scarce resources?

That’s the theme that’s been consistent, and as I always remind my investors and have been reminded for the 18 years I’ve been an investor, we’re stewards. We are stewards.

The object is to make this franchise a winner, to expand its reach, to expand and increase its value. These are not strategic investments. These are people who have an enormous commitment to baseball, who see it as the national pasttime and believe that this community deserves a well-managed franchise that puts winning baseball on the field.

ogc: If the team wants to be a winner, it has to commit to spend the money to keep all the young stars around for a long time. We should not be forced to either watch them walk via free agency or be forced to trade them to other teams, like the A's have been. We never should have been forced to trade Russ Ortiz before the 2003 season, when there was a rainy day fund that could handle that (the existence of which was revealed when they tried to sign Greg Maddux). Or that money should have been used to get Vlad, but instead was saved for a failed pursuit of Greg Maddux. That is the legacy of the infamous rainy day fund.

Again, this answer shows the history of his commitment to the Giants, as he moved from limited owner to managing general partner, yet he's now divesting all his shares soon, the only move he could make to protest this decision without violating any corporate rule of thumb or legalese in his contract. It is like the Navy personnel who were captured by the North Koreans in the 1950's: they could not show that they were unhappy in a group picture the Koreans took to show that they were "happy" and alive, but they took the only stance they could to show that they were unhappy, one of them showed the finger to the camera, which apparently the Koreans did not know what that meant.

-Q: Larry, it was reported that Bill did not communicate adequately on the board. Will it slow you down to make decisions and will you not have as much power?

-BAER: I see as we’ve said that what we’re looking at here is creating a strategy for the team to win, on the field and be successful off the field as well. I have no doubts that we’ve got support to do that.

That’s what it’s all about from the perspective of the owners, the perspective of the management, and that’s where we’re going with it. I know the investors. I recruited many of them, most of them, I suppose, with Peter, with Bill.

I have no doubts we’re going to continue on that mission and be a strong brand, a strong franchise.

ogc: Clearly the lawyers and PR experts prepped everyone to talk about winning and how this all revolves around winning. That's why every other statement and answer seems to be about winning. I don't see pushing out Neukom about winning. I see it as petty because it is related to owners complaining about finding out about deals in the newspaper. If that is such a big problem, tend hire Neukom a cheap personal assistant whose job is, among others, to report immediately to all the owners, any substantial move that will be defined to be one that needs to be communicated. If they really wanted to keep him as leader, they would have found a way around this.

-Q: If Brian comes to you wanting to come after a player, how many people are you answering to and do you have to make nine phone calls?

-BAER: I don’t see a lot of change. We have a board but more importantly, we have a budget as we’ve had in the past years. Brian is empowered to put together the team he needs to put together to win.

That budget is not something that’s handed to Brian, that’s a collaborative effort between Brian and the CEO, with sign off from the board, as to what that budget will be.

It’s business as usual. It’s produced a winning team, it’s produced two World Series since we’ve owned and we want there to be more. And we’re going to work the best we can to make that happen.

ogc: While most of this is corporate speak for the collective will of the ownership group, I think this unwittingly broadcasts part of the unhappiness of the ownership council, as Baer makes the point of saying that there is a budget that everyone signs off on, and that the team will hold to it. Neukom said previously that while there is a budget, if there is a good baseball move that is only being held back by money, bring the deal to him and let him see if he can figure out a way to get the money to make the move. Clearly, such moves are gone now.

At some point later, it is noted that the budget will not go down, but neither was it emphasized that it will go up if there is a good baseball move that allows the team to win more. Despite all the blah, blah, blah about the Giants all about winning, that is a key difference between the message Neukom conveyed and the message Baer conveyed: the Giants are about winning now, but only within the agreed upon budget.

That is stupid if that means that the Giants end up losing, say, Bumgarner, forced to trade him because he now became too expensive, while the rest of the payroll is covering Lincecum's, Cain's, Sandoval's and Posey's big contract salaries. If the team is about winning, we keep these players to their early 30's, period. It appears we are back to penny-pinching ownership again. The dream is over.

-Q: Bill, looking back, is there one thing you would do differently?

-NEUKOM: I think the answer is that there’s nothing material that I can think of that I regret. It’s more a matter of counting my blessings coming into an organization that had such a proud history, that had so much talent in the ranks.

The first thing I said over in Treasure Island, is I think we have the best general manager and manager in baseball–and I said it because I wanted Brian and Bruce to know they had my support. That may be the smartest thing in the course of my administration.

We made efforts across the board. We have a management committee that meets at a strategic level on a regular basis. We’ve got a performance management system … thanks to Brian willingness to step in and become part of the management committee, we’ve got integration with the baseball people.

It’s not an us-and-them situation in the organization. We are joined at the hip and there’s an enormous amount, I believe, of trust and respect and communication that goes on between the baseball folks and the non-baseball folks.

I think we’re better able to put winning baseball on the field and take advantage of that in the front office. I don’t think any regrets.

I wish I hadn’t been in the stands when Buster got clobbered. I wish I hadn’t been in my seat when Freddy slipped in the wet grass and lost that shoulder.

I wish that Pablo hadn’t had a hamate operation that knocked him out for effectively six or seven weeks. I wish that Willie’s elbow was 110 percent. I wish a lot of things about this year but I haven’t figured out how to control Mother Nature.

ogc: Question that had to be asked by the reporters and answer that Neukom has to do as out-going executive. He can't give any overt answer that suggests that this move wasn't the smartest move ever. His divestment, however, tells exactly what he thinks of this move, very effectively. I mean, he didn't even divest back to where he was when he became managing general partner, he's selling everything, he's cutting off any connection with any of the other owners in terms of dealing with the Giants. Clearly he is pissed.

-Q: Bill was the symbol of this team’s unwillingness to give up rights to San Jose. Larry, does this move change the franchise’s stance about the A’s moving to San Jose?

-BAER: No change on that position. It’s a position that Bill’s had, it’s a position our board has and it’s a position that I have.

ogc: This has nothing to do with the change. This, as I've been saying, is a way to get more money, whether via the A's shelling out $100M (in cash and other assets) for the rights for the South Bay, as is only right because the A's originally paid nothing to enter the Giants territory long ago, the South Bay should have always been the Giants territory, despite the hogwash that the proponents of moving the A's to San Jose has been spewing, or the A's ending up moving elsewhere, which would boost the Giants value greatly being the only team in this area.

At that point, I think they reconfigure AT&T (at least I hope they had the prescience to design a potential expansion of the park should the need ever come up) to add on 10,000+ seats, and rake in more money that way. Either way, they then have the money to sign all our young players long term.

-Q: There’s been much made about the “Giants Way.” What happens to that now?

-BAER: [EDIT]

There’s an evolutionary aspect to this, where we get better by being smarter and having new perspectives. I think what was a very fresh perspective for the Giants was Bill coming in, the Giants Way, the performance management systems that we talked about and Bill’s take on an organization and the value-added aspect.

I hope to bring those sorts of perspectives and some fresh perspectives, even though I’ve been here a while, and learn from others from inside and outside to bring some perspective over time as well.

-NEUKOM: Larry will have fresh ideas. He’s very agile-minded and he knows this organization upside-down. The Giants Way, as I’ve said, there’s nothing in it that’s original.

It’s just a collection of ideas that I thought would be useful as guiding principles. I wouldn’t have said anything about it if it hadn’t made enough sense to them, if they hadn’t agreed that it was worth having it there as a template and as a guide.

None of this came out of a single brain. That would have been presumptous. It was a Giants memo, if you will, that seemed to be useful at the time. It’s not etched in stone. It continually is tested and revised and improved. We’re organic.

[EDIT]

ogc: Expected question and answer, as I'm sure they both were prepared to answer a large number of probable questions, practicing and given the proper way to answer. But notice that Neukom notes "them" vs., say, "everyone", which would be a much more inclusive term. Remember, he's a lawyer, experienced in the nuance of language, he somehow helped Microsoft squirm out of huge damages that the U.S. should have inflicted upon them for their abusive business practices that allowed them to build one of the most powerful monopolies of all time. If he were still on good terms with the team, he would have used the inclusive term, but now it is "us" vs. "them."

-Q: The payroll rose to $120M this year. Will it continue to rise or what will happen?

-BAER: While we haven’t gotten into those discussions, I will say this, I do not foresee the payroll going down.

We have to obviously put together the budget and that will be a collaborative process. Obviously, Brian and his folks are right in the middle of that, but I do not see the player payroll going down for 2012.

[EDIT]

ogc: While a lot of the analyses note that the payroll will not go down, notice that Baer never sad that, what he actually said is that he does not foresee the payroll going down. Lots of wiggle room on that statement that none of the reporters caught. He could say later that something unforeseen came up and that's that, payroll down.

For example, they could say that they are keeping aside money by apparently pursuing Carlos Beltran, knowing full well that he most probably is not going to sign with the Giants, and when he doesn't sign, it is too late to spend the money on other players except for the cheap ones available in January, which is about when Beltran will sign.

Sidenote: recent media reports notes that Beltran is open to re-signing with the Giants but that being here did nothing to increase the odds of him signing with us, plus he notes that if he were to sign, the Giants would have to commit to improving the offense by signing not just him but other people, beyond "just" Posey rejoining the team, which some reporters noted Jose Reyes, and he agreed that he would be a good example.

There is no guarantee that the Giants under Neukom were even going to expand their payroll to sign Beltran, but now under Baer, there is almost zero chance that the Giants will sign both Beltran and, say, Reyes. The payroll will have to go up by a lot, plus such a move probably will jeopardize keeping Lincecum and Cain on the Giants. Clearly, this was a prepared comment by Scott Boras, one to promote his other client, Reyes, two, to make it unlikely the Giants pursue Beltran, because previously, Beltran complained a lot about AT&T and he appears to be too fragile to make it here, as evidenced by his two week absence in the middle of the pennant chase.

I thought maybe the Giants could get him on a short 2 year contract, but if he expects the Giants to sign another top player, 1) he clearly don't understand how much this pitching staff contributes to the team's winning ways, 2) he clearly don't understand the offensive impact that Posey provides the lineup if Beltran were in the lineup with Pandoval AND Posey, and 3) I think he clearly don't want to re-join the Giants, Boras could have easily told him that such a demand would effective kill any chance of the Giants signing him. Unless, that is, the rest of baseball suddenly caught on that Beltran is not that reliable a player, based on his two week vacation in the middle of the playoff race, and he is forced to deal with the Giants even without another good player signed.

There is no way the Giants should sign Jose Reyes to a big contract. That would pretty much kill any chance of signing Lincecum to a long-term big money contract and force the Giants to either trade him or watch him walk off for two draft picks, which should not happen if the Giants are smart. It could also jeopardize keeping Sandoval and/or Posey as well, I believe.

-Q: Bill, how would you characterize your relationship with the other investors, and if there were disagreements, did that surprise you in the year after winning the World Series?

-NEUKOM: My relationship with the other investors, from my standpoint, is positive. I count myself lucky.

As I said, the first meeting I went to, I called Peter Magowan at the office. They said he’s not at the office. It was a cold call of a sort, from Seattle, and they said call him at home.

So I called him at home and I said, ‘Peter, are you still taking investors?’ And he said, ‘Yeah.’ … I said, ‘Don’t you want to vet me?’ He said, ‘Let’s talk a little more. And he said, ‘Come on aboard.’

And when I walked into that room and when I saw that group of then-about 30 investors, I thought to myself, ‘These are impressive people.’ Again, with a single core common commitment to a love of baseball, and wanting to bring to this community, this fan base, baseball played the right way, winning baseball.

It was palpable and always has been. And that is what brings us all together.

Do some of us have different ideas about how to best accomplish that? Sure. That’s inevitable, and frankly, it’s healthy. So I’m looking forward to sitting in whatever seats across from Jimmy, over here near our dugout, right along my colleagues, and I look forward to a lot of good fellowship and shared demonstration of commitment to the Giants going forward.

ogc: Except that he's divesting himself of all his shares, cutting off any ties with this impressive group of people. And there is that winning theme again.

Notice that he said that his relationship is positive. Not perfect, positive. So he avoids the question with the best of politicians who know the skill of answering the question while skirting the question at the same time. I remember this rambling interview someone did with the then mayor of Washington D.C., and that guy did not answer ANY of the questions he was given. Not only that, but he sometimes rambled on about a topic that he wanted to talk about that was totally unrelated to the question at hand. I was impressed by such grand evasiveness.

So he avoids talking about disagreements by focusing on the positives, whatever they were to him before. And he answers, sort of, the first part of the question, while avoiding the later part of the question.

-Q: Was there an event that precipitated this change, perhaps the swallowing of Rowand’s contract?

-NEUKOM: There wasn’t an event that I’m aware of.

As I said earlier, this is a time for a transition in a healthy environment where the Giants have reclaimed a positive trajectory on the field and off the field, and there’s nobody better able or more prepared to step in than Larry, and there’s nobody more willing and prepared to step aside than me, given all the things that are going on in my life.

The Aaron Rowand decision, if anything, we have been generally applauded for doing that. It wasn’t easy to do. We liked the guy and he was in center field for us in November. I’ll never forget that. He was a good influence in lots of different ways.

But we had to put together the best team we could to give ourselves the best chance to get as far as we could this year. After a lot of agony and a lot of analysis, we made the tough decision.

I think the fans understand why we did it. We had a lot of good advice and guidance from the baseball brain trust.

ogc: As I noted above, he claims that once he came down from the high of winning, he thought about succession, so that is an event that precipitated this decision, presuming that the story that they are telling us is the truth. Of course, if this is not the entire truth, this mutually exclusive answer, either there was an event or there wasn't, implies that he is trying to give the answer that the Giants management wants him to say, which makes sense on the face of things, but when tied to the answer above, shows it to be B.S.

Then he actually rambled on with something about Aaron Rowand, the connection with him retiring I have no idea. Unless, that is, this was one of the moves that the fellow owners complained about hearing in the newspaper instead of from him. Again, if that is a huge problem, hire him an assistant, with one of that person's duties to contact all the other owners and let him know. The more I think about it, the more it makes sense that this might have been the last straw in the minds of the other owners.

-Q: Was that a decision everyone agreed upon?

-NEUKOM: In advance? No. There was plenty of foreshadowing that we were approaching that decision and there was no resistance.

ogc: Foreshadowing? The only foreshadowing is that he's approaching 70 YO and thus his time is limited, but there are 80 YO's who are still doing big jobs, whether running companies or being a congressman. Of course, he could be referring to him talking with the owners group, so perhaps this was something that happened. And that could make sense, as the media has been reporting, the owners have been upset about this for a while and finally made a move. Maybe he was speaking obliquely to this thread of discontent among owners.

And the question was not about it in advance: maybe the owner's group made the decision and then put it to a vote to the rest of the owners. Or a sub-committee of this board of directors came to this decision and then put it to vote to the rest. Not sure why he answered about in advance.

-Q: Was the disagreement over the rainy-day fund the precipitating event?

-NEUKOM: The Giants are a partnership. We have substantial reserves. I won’t mention the amount, but they’re very substantial reserves. So in any normal business sense of the word ‘rainy-day fund,’ we have a rainy-day fund, and it’s more than adequate.

ogc: If it is more than adequate, then why are the owners getting upset over an additional $6-10M? That won't even buy you a good player, let along a star player.

-Q: Bill, what would you teach a student regarding the one thing you absolutely need to do and the one thing you should never do as CEO.

-NEUKOM: The thing you need to do is to be very humble and very curious, about both baseball and about the enterprise you’re being asked to lead.

And the one thing I would encourage her not to do would be to ever be complacent, or to ever crow about success.

At the very top of our 2011 strategic objectives it says, ‘No complacency and no crowing.’ And frankly, I think that but for an unbelievable combination of injuries, this team that we built to win the division this year would have won the division.

And it would have done that not just with some swagger, but with some humility, some appreciation of how difficult it is to win just one major league baseball game, let alone win enough to win the championship in the division, and then get into the free-for-all that is the postseason.

ogc: Not that interesting a question. Answer is interesting, "no crowing." Because, if you look at the swagger of Wilson in Showtime's Franchise, he definitely was crowing.

-Q: Larry, now that you’re in charge of management issues, given the anemic state of the offense, are you and the committee prepared to move forward to pursue big-name free agents, whether it be Beltran or even Pujols?

And on another front, Bill had a press conference here not long ago to pick up the options of Sabean and Bochy. Are you committed longer-term to do that in terms of possible extensions?

- BAER: On the first score, that’s Brian’s department. How we constitute the 2012 team or teams beyond and decisions that could affect payroll beyond 2012 is going to be the basis of Brian’s recommendations.

It’s going to be lots of brainstorming, lots of work by him and his people to make recommendations. I think that one thing that hopefully has been learned over the last few years and is recognized by the fans is that, to contend, we have to be open to any possibility. So we’re open to any possibility.

We’ll consider anything. I don’t think we’re going to write off initially any possibility. Having said that, if you look at the way the team was built in 2010, there was a lot of homegrown talent that contributed to it.

So there’s going to be a discussion, and we haven’t had that discussion, but I know they’re hard at work beginning the analysis.

In terms of Brian and Bruce, hopefully what we said earlier rings loudly. That we think that they’re the best in the business at what they do. Thankfully they’re signed for the future, for 2012.

[EDIT]

ogc: Ooo, no commitment to work with either on an extension. Looks like both will be lame ducks in 2012, perhaps the owners are blaming them for 2011. My main thing about Sabean before is that it would be a shame for him not to experience the joys of success with the team he built. He experienced that last season, so I'm not as hard-lined about keeping him around, though I still advocate for re-signing him. I think I would be more upset about losing Tidrow or John Barr now.

Bochy, however, I would be upset now. I like the way he manages, going for the jugular when that time is ripe, but knowing that most of the time, it don't really matter that much. My research shows that he knows how to generate above average wins in 1-run games, better than any other manager around, which will keep the Giants in the mix, like it did this year, despite the poor RS/RA ratio and poor Pythagorean.

-Q: Bill, you brushed off the questions about communication with the committee. Are you denying that there were communication issues with the committee?

-NEUKOM: I think there was robust communication between the front office and the investors at all levels — more meetings, more pages, than there had been than before I came here.

So I don’t think there was a communication problem as far as I’m concerned.

ogc: Of course not, that is why he continued to do what he did, while the other owners complained, at least according to the information that Mark Purdy dug up. Notice that Neukom says here and above, "as far as I'm concerned". So he felt he was doing everything he was suppose to be doing, but apparently the other owners disagreed and pushed him out. Part of the nuance of reading between the lines and parsing how he answers questions.

Closing Thoughts

Neukom was fired, forced out, ousted. Clearly. He conveys that subtly with his limited options for action and the way he is crafting his statements. As a practicing lawyer, he knows how to wordsmith his statements. But once in the spotlight, he cracked a little, as I noted above.

It appears that Sabean and Bochy are also on the plank as well. Baer could have said that that's something they will work on with them during the off-season. Instead, he said it was lucky they were signed for 2012. Then again, the Giants normally do not provide extensions in the middle of any contract, so I will give them that. If either performs poorly in 2012, I would consider getting rid of them too.

It appears that the payroll is in flux. There is no guarantee that it will stay where it is, despite their statements. There are many things that one can't foresee, yet he felt the need to throw in that qualifier on his statement. Neither did he say that it could go up, though he did say some general statements that could suggest that they will spend more. I think that it will be somewhere between $110-120M most probably, unless they actually do sign a big money player.

Baer, I'm OK with but he still represents for me the failed Magowan era management thought. Neukom stepped up immediately to separate him from that, with his statements on the Giants Way and the willingness to entertain all possibilities for baseball improvement, whereas Baer so far sounds like Magowan, part 2. I will give him a honeymoon period, but my rope is short.

And the owners, I am thinking more and more that a billionaire needs to buy the team by himself and invest more in the team instead of hearing of any discussion of a substantial rainy day fund. A winning team does not talk about needing rainy day money. I want an owner like the Angels got, who will put up with losses and put more money into the team. He understands that the team's overall valuation will go up if he spends the extra money, he's not worried about depleting their yachting fund or opera fund or sailing fund or whatever other things the owners would rather spend their money on than on the Giants.

I expect to be writing another plea next spring training to Larry Ellison to buy out the Giants and bring us the dynasty that we have in the palm of our hands right now with Lincecum, Cain, Bumgarner, Posey, Sandoval, Belt, et al. Teams with rainy day funds don't look likely to sign the whole group long-term. But if they eventually do the right thing, then I would put my support behind the owners. But right now, they are back on my sh*t list.

18 comments:

a couple of quick thoughts - sorry if you mentioned it already, OGC, I read none of the press conference as I figured it was blather - may have missed a comment.

One is that, if Neukom was really retiring, the "proper" PR move would be grand statements as to his fabulousness, how sad it is he'll be going, all that. The lack of that public/corporate cliche is telling.

The other is I have to think that Neukom is not stupid - what he previously saw as a good investment he no longer does. I do get that the Giants are only part of his wealth, but do you dump stock if you think it's going to do well? And an MLB franchise has historically been a hell of a good investment.

Maybe it is just an F-U because he can, but you also gotta wonder if someone like Beltran sees the writing on the wall too, and what he's said recently is just a gentler way of saying "I really doubt it". Note that Beltran wasn't talking about his contract, he was talking about the Giants adding offense, i.e., payroll. That wasn't a shot at his teammates, manager, the city - it was at the ownership.

No doubt more anon....

More importantly, is anyone really noticing that the Giants are one game closer to the Braves than they are the D-backs? I sure am.

Positive: John Barr was hired in 2007 a full year before Bow Tie. Timmy, MadBum and Posey drafted back to back to back. There is still a commitment to the farm system.

Negative: These Burns sisters apparently have no interest in baseball at all. Rainy Day Fund is code for slow down that spending, we are perfectly happy to be a big fish in a small pond of regional bezball. Trust funders are into maintaining, not building.

Positive: I completely agree with your assessment of Baer - and as a marketer first he must realize the huge hit they will take if they don't hold onto home grown talent.

Negative: no way they can go after any good free agent on that budget. No Reyes/Beltran and definitely no Fielder. With amount of money/years those guys are going to get, most likely end result positive.

I think Neukom was talking of a 140MM budget and beyond, ruling the west coast. Already smarting about having to raise payroll to 120MM, with front man getting too much credit anyways, egos came out. Still, with Zito/Rowand, Sabean has been operating on a 70MM budget in 2010, 90MM budget this year and next. That's practically Moneyball territory baby!

People get weird, $18M for Ross and Huff, while maybe a bit high, isn't THAT high. That's what players cost. Ownership should have a reality check, there's a bunch of very good players that are (now) on the cheap. That won't last, now is the time to take advantage.

But you're right, the evil twins (I know nothing about them actually) seem very risk-averse. The ultimate expression of that is the Marlins. Who are a shame, and widely seen as one. I really do hope the Giants don't go that route.

1. One thing I've been struck by in all this is what decade are these people living in anyway? Modern technology allows for instant communication with multiple people at any time. We keep getting visualizations of Neukom having to round up all 10 members of the Executive Committee into a cherry paneled boardroom with black leather chairs around a huge wooden table. The world doesn't work that way anymore! If an opportunity for a trade comes up, that's going to add payroll, you can poll the board members in a matter of seconds.

2. In Bruce Jenkins' discussion of what he's gleaned from his contacts, the problem may well have nothing at all to do with player payroll, trades or any of that. There were hints that maybe the the front office was spending lavishly on non-baseball related stuff and maybe the the lady who was caught embezzling was a symptom of a deeper laissez-faire management style in regards to non-baseball personnel.

3. I don't see it as an imperative that all homegrown players need to be kept at all costs. While the A's have taken it to an extreme, there is a role for trading homegrown talent that is on the verge of becoming expensive to leverage even more talent that is on the verge of breaking into the majors and is still inexpensive.

Thank you for the comments everyone! Especially with the correction. I think the main point still holds, that the odds of Beltran coming back too a huge blow with these comments of his and assertions of what the Giants need to do in order to measure up to his standards. He clearly underestimates the power of a great rotation, his loss, hope he enjoys counting his money to the bank while the Giants compete for the championship every season.

You would think that at this stage of his career, he would do all he can to be associated with a team that can get him to the dance every season. Obviously the money is more important to him.

Unless, of course, he expects to sign with the Phillies, in which case, game on!

I don't know, OGC. Sabes was surprisingly conciliatory in his response to Beltran's comments, almost going out of he way to enthusiastically agree with him and praise his baseball acumen. Not saying the Giants are going to sign Beltran, but Sabes was obviously trying to build bridges rather than burn them, and Sabes has never been one to kiss up to anybody or cotton to criticism or ultimatums.

I see your point DrB, but the way I see it, Beltran's statement clearly signaled that there is almost no way the Giants can sign him, and that saves Sabean from having to explain to the media going forward why he wasn't able to sign Beltran. He can just point to this statement.

If I were Sabes, this is the response he should give, agree with the statement, praise his acumen, as that frees him from having to answer the media about why he didn't sign Beltran.

If he wants Beltran, he first needs to get a leadoff guy.

No way to get leadoff guy because they need to take care of the pitchers first, Beltran was a wish anyway, as it would require increasing the payroll again to sign him, let alone raise again to sign leadoff guy, which in this market, is basically only Reyes.

Thus, Beltran's statement = no way to get Beltran.

Still, I agree with you, Sabean never says more than he needs to, and he certainly never kiss up to anyone, and he certainly hates ultimatums, as Beck and Baker learned to their sorrow.

So much for Beltran getting Torres square with his sage advice not to try and hit home runs anymore eh?

The Giants are going to have to muddle through for a year hoping that Gary Brown is the real deal for 2013. So its Coco Crisp (who really isn't a leadoff guy), or Torres, or Torres/Ross.

I think Sabean realizes you don't lose anything with positive comments for Beltran. The good quotes will come out once Boras fires broadsides at him regarding our record low offense. The last time they had to lock horns Sabean had a good one about Boras having enough money to buy a team that I liked - I think that was Matt Holliday.

Beyond that, Sabes does hold grudges, and I think the Zito contract still sticks in his craw. No way he's doing business with Boras. I don't see any Beltran move unless we pull a miracle and make the postseason and then he pulls a Weaver on Boras. Both of those are less than 3%.

I'm wondering if there is a trade for a cheap leadoff guy through Dirty Sanchez. Longshot, but Span on Minny has his concussion issues, and they have another guy in the wings, as well as pitching woes. So he's a slightly tarnished guy (that they shopped hard this year) who could play center and hit leadoff. As long as the concussion is OK, which is a big big question mark.

Forgot about the Beltran-Torres connection. I still think that Beltran, Posey, Sandoval, Belt in the middle of the lineup would be good enough to win a lot of games in 2012 with our pitching. And if Huff is back, Belt would be our 7th hitter. Too bad Beltran don't think so.

What is wrong with Coco Crisp? Besides his injury problems, that is. I thought that he might be a good signing for that leadoff/CF spot, his OBP is league average, and with our pitching, we don't need more than league average to be a dominating team. But if you think he's not that good, then I could change my mind.

Yes, thanks, hit the nail on the head with Sabean on Beltran, don't lose anything.

And yes, Sabean does hold grudges, that is one thing I worry about him sometimes, but so far haven't seen anything detrimental happen from that.

Though I don't know that he blames Boras as much as he would blame Magowan for foisting that horrible deal on him.

But I agree, no love lost there. Boras and Maddux hung the Giants out to dry when Maddux got that deal he wanted from the Cubs and left the Giants high and dry.

I agree that Dirty is the guy to trade this off-season, if possible. A young leadoff guy would be good, though Span would be even worse offensively than Crisp, wouldn't he? He's been horrible for two seasons now, and only gets us an additional season of contract control.

I want a good prospect or young hitter for Dirty, I'm not willing to settle and trade just to trade, though. At worse, Zito could be our long relief out of bullpen, and rotation of Lincecum, Bumgarner, Cain, Dirty, and Vogie to start the season, and trade Dirty midway for good prospect, if possible, somebody will be desperate enough for a good pitcher to do that, I believe.

If Minn gives up Span and another OK prospect, I would be OK with that trade.

Yes, Shankbone, contrary to all the lies and misunderstanding out there, the Giants have always been committed to the farm system. It is just hard to produce a lot out of the system when you are winning and stuck with poor draft picks. Look at the A's, Braves and Yankees, late 90's, early 2000's. Very hard to do.

Today, it is easier, though still hard, as more amateurs fall in the draft due to signability issues.

But the Giants have tried to build within, it was just that we had really bad luck with Ainsworth, Williams, and Foppert. And Lowry.

I agree that Baer has to realize the big hit, but fiscal conservatism and keeping our young stars in Lincecum, Cain, Bumgarner, Posey, Sandoval, are mutually exclusive. I thought that Neukom would find a way, i.e. invest more money into the team, but now that he's gone, I don't know who would do that now among the investors.

Yeah, good point, with those two bad contracts, Sabean has basically been moneyballing since Zito was signed.

Marc, very good point about very little grand statements, thanks for pointing that out, yes, another sign that this was a forced retirement (heck, he has a whole litany of things lined up to do, some retirement, huh?).

I disagree about the other point though about good investment. Neukom never appeared to be doing this out of investment gains, he seemed to be doing it out of love for the team. He could have pursued a greater share for another team long ago, he has the financial wherewithal to find another partner (like the A's been doing with tandem owners) who would let him be the lead guy.

I still think he is still selling out everything now to spite the remaining owners, to show his protest of this move, else why make the point that he'll be keeping his season tickets, but not his ownership, after spending 17 years building up his ownership share from a little to a lot. And talking about getting shares when he was a kid?

I still think Beltran set up a situation that tells the Giants that he ain't coming back unless the money is big. That is, you buy out his fear that the team needs a leadoff guy. If there was a lot of interest in him returning, he would not have put such a clear and definitive line in the ground, to me.

I just hope the Giants don't sign Reyes, and I have no reason to think they would. He wants a huge long-term contract but hasn't even put in a full season in the last 3 seasons now. He has been terribly injury prone.

Besides which, committing huge money to him would result in losing one of our young homegrown talents to free agency eventually, particularly now that Neukom is not around to maybe step up and invest more money into the team.

Could Beltran and Reyes be good friends? Maybe this is his way of trying to make them a package deal.

Either way, this statement signals hard that the Giants will have pony up, not just for Beltran, but for a leadoff type, and isn't Reyes the only free agent like that available this off-season? I am assuming a good leadoff option.

It was a slim chance that we could even think of signing Beltran, but him and a leadoff solution that he would have to be happy with (and again, I think that means Reyes)? Not even the most Pollyanna-ish Giants fan would think that would ever happen.

I think Beltran is still missing the point. Don't need a great offense to win with our pitching. Our team would be a 92 win caliber team with Cub's offense (4.08 RS).

They had a below average C and 2B, much above average 3B, above average 1B, and slightly above average rest of the team. They cobbled together a decent leadoff solution by platooning, Starlin and Fukdome, for the most part. Neither really stole that much (20 SB).

We could probably do that platooning, say, Belt vs. RHP leadoff (good baserunning instincts, good OBP if hitting like he can, sees a lot of pitches) and find a RHB to leadoff against LHP. Heck, Schierholtz historically has hit better vs. LHP and is a good baserunner too. Think out of the box.

Let's see, Crawford can be one of our below average hitters, batting 8th. We got Sandoval as the above average 3B, and Posey should hit as well as their 1B did (if not better), so there are the two good hitters.

Franchez at 2B and Schierholtz in RF would be slightly above average hitters there. I think Belt could fit that role in LF.

That leaves CF and 1B for league average and below average. Huff has been below average but if he can deliver mid-700 OPS, he would be similar to the Cubs lineup for average (since we have Posey).

Coco Crisp would be actually good for the offense, a final piece, if not for one salient fact: He hasn't really put in a full season since 2005, really (though 591 PA in 2007, but I view 600+ as full). Out of his last 6 seasons, he has exceeded 500 AB only twice, 2007 and 2011. He could not even put together one season's worth of games in 2009-2010 (124 games).

Pass.

Plus, given how well Pill has played so far, I suspect that he'll be playing a similar role to Torres in 2009 and 2010, backup with good bat and good defense, who can maybe step up if necessary.

Among CF, I can see the Giants taking a flier a la Uribe and Huff previously, on David DeJesus, who has been a good career OBP (plus the Giants nearly picked him up last season, got Guillen instead because of DeJesus' injury), and usually good defensively. Nate McLouth probably won't get his option picked up, so he could be another that Sabean will kick tires on.

Cody Ross I would throw in here too, he's more of a platoon player really, he's never hit RHP that well, so we might be able to get him for a $2-4M deal this off-season. And, looking at his 2011 splits, the real reason for his poor season is that he's been hitting horribly against LHP, which he normally killed (career .912 OPS despite poor 2011).

Changing his 2011 v.LHP line to match his relative poor (for career) 2010 line, he would have batted .253/.334/.448/.782 this season, which would be great for us in CF, heck, anywhere. And LHP batting lines are very volatile due to relatively few ABs.

I think all three would be viable transition year 2012 before Gary Brown is ready to make the majors.

Speaking of which, his play in the AFL could influence decision making here. If he has a great showing, they might be willing to hang with Torres as the starting CF, with the thought that if Torres fizzle out again, Brown might be ready to come up to majors by mid-season. Torres should not expect much of a raise, if any, for his play in 2011, so I don't anticipate him being refused arbitration and DFAed. Or maybe he might do a deal like Fontenot, DFA then signed to pre-negotiated deal perhaps.

Also, I would think that Francisco Peguero might be ready by mid-season, he'll be in AAA next season, 24 YO, could get a trial by fire opportunity if Torres flames out again.

Still, Sabean don't operate this way, I think he'll be signing some vets as backup options and/or competition for CF, and the vets above look like the best options.

I'm pretty sure Beltran's point was that the Giant's needs on offense are not necessarily middle-of-the-oreder power hitters, but rather guys that can consistently get on base, so that he and others in the middle of the lineup have RBI opportunities. Adding Reyes would fit that bill. Yes, there are serious concerns about his durability, but if you're looking for a OBP guy who can be a game changer, this is the guy. Add in the fact that he plays plus defense at SS, a real need for the Giants, it would be a no-brainer.............absent the huge contract & injury concerns. Given his age, I think it's a risk worth taking.

Re Neukom: the word is that the disagreement with the investors revolves around what he should be compensated for his services, no communication and all that other non-speak that we've all heard.

I hope with the amounts of money the team is making that the home grown talent is retained. Its my biggest fear that they let Cain go and resign Wilson (more fake beards for the kids!) Wilson is the one smart GMs let go.

Don't have a problem with Beltran's comments. You need someone to get on base and disrupt the pitcher. Torres was that guy in 2010. Reyes was that guy with the Mets, although the past 3 years are pretty checkered. Beltran is pretty detached, some people are bothered by that. Meanwhile, he has just been straight raking. THAT'S a professional hitter Bochy, not Orlando Cabrera.

I'm not saying Reyes is without risk, but if he signs somewhere for a reasonable deal and the Gints claim poverty - like Vlad and the Angels - that will be a big blow. He fills leadoff, speed and short. Its the perfect fit, except for the money and years. If that risk can be brought to a reasonable level, its the one move to do. The baller move is to bring in Beltran and Reyes. So Beltran is pretty much right. Good for Sabean.

I didn't realize the years left on Span in Minny - he's got 3 years for 14MM total and then a team option. Maybe not such a hot idea.His first two years he had great OBP - close to 400, that has fallen off the past 2.

always been a Coco Crisp fan, but he's getting old and expensive. Career obp of 333 doesn't really scream leadoff to me. His arm is below average but he has good range. The health thing scares me and his power has gone from occasional to non existent. I think he'll get a multiyear deal in this market at above Cody Ross arb money, and that would be a mistake for the Giants.

Dirty will be interesting. I've read some places he is a Boras client, just switched, but haven't been able to confirm. Its really hard to trade that arm, even with his 10 cent head. When he is right, he is amazing. Most frustrating Giant by a long shot. I think a lot of teams will be trying to low ball Sabean this offseason for him. If a couple nice pieces could be had, great. I think that ship has sailed though. He is going to cost about 6.5MM, so you have to juggle him versus the bullpen, or the OF.

Thats what makes it fun though - you don't have unlimited resources like in roto. This is the complete opposite of last season. Oh, and its not quite over yet either, this season of ours...

I, Me, Mine

Wow, this was easy and amazingly free. I am a big Giants fan and I hope to use my experience in business (MBA) and analytics (nearly 25 years) to bring up interesting facts to other Giants fans so that we may better understand the team's chances for success (or not) and hopefully share their insights with me. Please read my "OGC's Business Plan" link to better understand what my philosophy is for building a successful MLB team.
I want to teach and share my love of baseball and, in particular, my love for the San Francisco Giants. I will believe to my dying days that Bobby Bonds should be in Baseball’s Hall of Fame for being one of the few to bring the combination of power and speed to the game.
Why a blog? I love technology and society and just wanted to participate in this trend to see what it felt like. Plus I have a lot of questions I would like answered about the Giants and since I don't see anyone else tackling them, I've taken it upon myself to do it. Not that I'm that special, but just that I'm willing to put in the time to investigate them.